Air Canada’s load factor rises on increased traffic across Atlantic

Air Canada managed to fill its planes slightly fuller in May than a year ago, driven by improved traffic across the Atlantic.

The country’s largest carrier reported a May load factor – or average amount of seats filled on its planes of 81.8%, up 0.1 percentage points from last year, as traffic improved 2.9% on capacity increases of 2.8% year over year.

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“We continue to manage our capacity effectively and that our planes are flying fuller as customers keep choosing Air Canada,” said Calin Rovinescu, Air Canada chief executive, in a statement. He also noted that the carrier’s on-time performance improved year-over-year during the month.

The news comes one day after WestJet Airlines Ltd. said its own load factor slipped 0.7 percentage points year over year in May to 78.5% after its traffic improvement of 8.2% failed to keep pace the 9.1% increase in capacity at the airline during the month.

Concerns have been raised in recent months about the amount of capacity that will be entering the market and what impact that will have the prices and profitability of both Air Canada and WestJet.

Both stocks have tumbled in recent months.

Cameron Doerksen, National Bank Financial analyst, said he believed the May results show that demand for air travel remains healthy.

But he said he was maintaining his sector perform rating on Air Canada and his $3 price target on its shares.

He has an outperform rating on WestJet and a $28 price target on its shares.

“We continue to believe [WestJet’s] growth is aimed at profitable market share gains, that competitive capacity growth is rational and based on forward bookings and our own weekly fare surveys, that demand for air travel still remains steady,” he said in a note to clients.